Honeywell Technologies reported third-quarter organic sales growth of 7% year over year. It generated strong results across all three business segments, but shares traded flat on Oct. 22.
The shift away from siloed, transactional sales toward connected systems with software overlays should continue to lower the cyclicality of operating performance and raise switching costs.
Bears
The spun-off aerospace business segment displayed strong countercyclical characteristics. Honeywell Technologies’ remaining portfolio risks outsize operating income declines in economic downturns.
Honeywell traces its roots to 1885 with Albert Butz's firm, Butz Thermo-Electric Regulator, which produced a predecessor to the modern thermostat. Other inventions by Honeywell include biodegradable detergent and autopilot. Today, Honeywell is a global multi-industry behemoth with one of the largest installed bases of equipment. It operates through four business segments: aerospace technologies, industrial automation, energy and sustainability solutions, and building automation. Recently, Honeywell has made several portfolio changes to focus on fewer end markets and align with a set of secular growth trends. The firm is working diligently to expand its installed base, deriving around one third of its revenue from recurring aftermarket services.